EPA is proposing - Petroleum Equipment Institute

As described more fully in Section III.E.1.d, we request comment on the issuesassociated with alternative effective dates for RFS2.B. Impacts of Increasing Volume Requirements in the RFS2 ProgramThe displacement of gasoline and diesel with renewable fuels has a wide range ofenvironmental and economic impacts. As we describe below, we have assessed many ofthese impacts for the RFS2 proposal and we will have more complete assessments,including a cost-benefit comparison, for the final rule. These assessments provideimportant information to the wider public policy considerations of renewable fuels,climate change, and national energy security. They are also an important component ofall significant rulemakings.However, because the volumes of renewable fuel were specified by statute, theywould not be based on or revised by our analysis of impacts. In addition, because wehave very limited discretion to pursue regulatory alternatives, the proposal does notinclude a systematic alternatives analysis. We have investigated regulatory alternativesin some areas to the degree that EISA provides discretion.As one point of reference to assess the impacts of the volume requirements for theRFS2 program, we used projections for renewable fuel use in 2022 that EIA issuedthrough their 2007 Annual Energy Outlook (AEO), and for transportation fuelconsumption through their 2008 AEO. This reference case, referred to as the "AEOReference Case," represents a projection of the demand for renewable fuels prior toenactment of EISA while still reflecting the new Corporate Average Fuel Economy(CAFE) requirements in EISA, and the 2008 AEO projections for the future price ofcrude oil ($53 to $92 per barrel). Further discussion of the Reference Case can be foundin Section V.A.1. Other points of reference include the renewable fuel volumesmandated by EPAct for the RFS1 program, renewable fuel use prior to implementation ofthe RFS1 program, and the full impacts of renewable fuel use compared to a petroleumonlyeconomy.Given the short time provided by Congress to conduct a rulemaking, many of ouranalyses were done in parallel for this proposal. As a result, some analyses wereconducted without the benefit of waiting for the conclusion of another analysis that couldprove influential. Thus, for example, impacts on food prices assume that soy-basedbiodiesel and sugarcane ethanol will qualify as advanced fuels under the proposed RFS2program, even though the analyses conducted for this proposal might preclude sucheligibility. We have highlighted such inconsistencies in results and assumptionsthroughout the proposal. Additionally, since we have identified many issues andanalytical options in our assessment of which biofuel pathways would comply with theGHG thresholds, the assessment we conducted for this proposal may not reflect the finalrule in all cases. We will be addressing these issues of analytical consistency betweenanalyses more fully in the final rule.32